Minnesota plans to reward doctors for keeping Medicaid patients healthy, rather than just treating them when they get sick.

A pilot program that is the first of its kind in the nation is expected to turn the state's current health care model on its head. But Gov. Mark Dayton and Human Services Commissioner Lucinda Jesson, who announced the program Friday, estimate it could also save the state $90 million and countless painful trips to the emergency room over the next three years.

Instead of paying doctors each time they see a patient or administer a procedure, the new model would encourage health care providers to steer clients into preventive care. The goal is to encourage checkups and early treatment, instead of emergency room visits and extended hospital stays.

If Medicaid expenses come in lower than expected at year's end, the providers and the state would split the savings.

"Change the incentives, keep people healthy, be more efficient," Jesson said, in describing the new system for reporters. "Right now, in our health care programs -- as in so many across the country -- the incentives are to providers and for plans to do more. We pay for people to do more. ... This is a dramatic change."

The program launched on New Year's Day for about 100,000 participants receiving aid through the state's health programs for children and families. That's a fraction of the 800,000 people who use its Medical Assistance and MinnesotaCare programs.

So far, six providers have contracted with the Department of Human Services under the new payment model: Children's Hospitals and Clinics of Minnesota; Essentia Health; CentraCare Health System; North Memorial Health Care; Federally Qualified Health Center Urban Health Network, and Northwest Metro Alliance.

Each provider contracts with the state to provide for a set group of the Medicaid population.

For Children's Hospitals, the new payment system will mean getting rewarded by the state for innovations it already was testing. Children's treats some 14,000 young Medicaid patients a year, and it already was working on an enhanced care model that linked some of its patients and their families to a coordinated network of doctors and specialists, longer office visits and extra educational outreach.

"This is an innovative way for us to hold down costs while improving the quality of care," said Maria Christu, general counsel and vice president of advocacy and health policy for Children's.

Christu said her system has seen a decline in hospital visits for the children in its enhanced care program, which now is expanded to all of the Medicaid patients it serves. The state pilot program, she noted, links the rewards it pays providers to quality measures that should ensure that lower costs don't translate into a lower quality of health care.

For now, both sides have agreed to split profits. If the program continues, both sides also would share the losses in years when patient care is costlier than targets.

The aim, Jesson said, is to encourage care providers to find creative ways to get people in to see their doctors, rather than waiting until they are so sick that the cost of their care skyrockets.

Providers are willing to take that risk, Jesson said, "because they know that if they do more prevention, if they do more early intervention ... we get better health outcomes, and because we have better outcomes [we will] save money."

Dayton and Jesson, meanwhile, will head to Washington, D.C., on Tuesday to negotiate a different sort of health care reform. The state wants to use its MinnesotaCare program to deliver new services mandated by the federal Affordable Care Act, but can't do so unless the government grants a waiver.

After repeated requests, the governor and the state's top health official are heading to the Beltway to ask in person.

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